Holden demise the price of a global economy

In the short term, there's no consistency in politics. Back when the Gillard government announced the carbon tax, it took about six seconds for the Coalition to scream this would cost jobs and devastate entire towns. Bollocks, retorted Labor, occasionally by way of karaoke.

Sure, some industries would be hit, but they were the kind of industries the environment needed us to scale back. Meanwhile, we would create shiny, eco-friendly jobs. People would retrain and find new opportunities. The workforce was adaptable and dynamic.

"Twenty years from now, Holden's departure will be just another marker on a journey the direction of which is clear and irreversible."Credit:Kate Geraghty

Now, with nobody really noticing, Labor and the Coalition seem to have swapped positions. As Labor inspects the carcass of the Australian car industry, it foreshadows monstrous job losses, the devastation of manufacturing towns in South Australia and Victoria, and protests that you can't simply ask people who have spent their lives assembling cars suddenly to work in nursing homes. And the Coalition is suddenly brimming with confidence that these things are always transient, evolving and ultimately leave us stronger.

But in the long run, things are far more consistent than all that. The truth is that the death of Australian car making did not begin on election day, September 7, but 30 years ago, when the Hawke government began abolishing tariffs and opening us to global competition.

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This was declared a necessary step in Australia's economic evolution. It would bring growth, dynamism and, after some pain, prosperity.

When Labor today argues the Coalition is sacrificing blue-collar workers at the altar of an economic theory, it omits that, in Australia, Labor was that very theory's midwife. Ask Paul Keating. Actually, don't bother. He's already given his answer when asked what he'd say to blue-collar workers whose jobs disappeared on his watch: "What do I say? 'What's your new job like.' … I mean, did we ever hurt anybody liberating them from the car assembly line?"

For now, an argument rages on whether more government money would have saved Holden. The opposition insists $150 million would have done it. The government points out that Holden, like Ford before it, has been "saved" in this manner several times before, only to be unsaved and threaten to leave again. The truth is we'll never know because Holden won't tell us, and even if it did, it would be guessing.

Either way, the government's argument is interesting because it boils down to the assertion that there is nothing it could reasonably have done to prevent this; that this decision was out of its hands and was based on economic factors largely beyond its control. But in defending itself, the government has made an epic admission: that we're not really in control of our economy.

And that much is the heretical truth. We chose to make it true when we threw our lot in with the global free market. We'll never admit this in stark terms. We'll continue to argue over each sensational development such as this week's. But the grander theme cannot be resisted: we do not call our own shots; no longer is there a hierarchy with the nation-state on top and everyone else - corporations, civil society and citizens - below.

Power is shared now. Companies play countries off against each other looking for the best deal, much as we haggle over a shop purchase. Our world isn't exactly borderless - and some countries are more protectionist than others - but those borders now seem to denote zones rather than dominions. The world is a country now, and nations are its cities.

That's where the difficulties start. The idea of an economy is that people can move within it, that labour flows to where it is most needed. In the case of car making, our workers just aren't needed. Not because they're not good at what they do, but because countless other people are good at it, too, and for a fraction of the cost.

It's not just Australia experiencing this. Take Japan, that car-making behemoth. It's lost about a quarter of its industry in the past five years. Even South Korea, whose workers earn about half of what ours do, has been in decline since 2011. These cars are now made in China and Thailand. Cheaply.

Remember Gina Rinehart's declaration that Australia can't compete while Africans are prepared to work for $2 per day? The problem with her argument is not that she's wrong. It's that, by the global free market's own lights, she is scandalously right.

Those lights tell us to specialise; to do what we can do better, or cheaper than anyone else. That's the logic we've embraced. Just last week we signed a free trade agreement with South Korea, which both major parties had worked on. The upshot: great for agriculture, bad for car making. Labor didn't quibble. Trade Minister Andrew Robb said the agreement was about "backing our strengths". That's what we do now.

But nations are diverse. People within them have a huge range of skills. Globalisation's demand that every nation specialise sits in contradiction with the social fact that not everyone is well placed to fit within our specialties. The market has its solution to that, too: labour mobility. You either acquire new skills or go where your skills will be rewarded. But the social and political reality is more complicated. Perpetual reskilling is expensive and not always successful, and Holden's workforce isn't about to move to Thailand.

The larger story here isn't really about our car industry, or whether we could have delayed Holden's decision to some other day. It's about the fact our politics don't match our economics: that the assumptions of a hyper-specialised global free market and its effortlessly mobile labour force don't reflect the more diversified, comparatively static nature of our societies.

Twenty years from now, Holden's departure will be just another marker on a journey the direction of which is clear and irreversible. We'll continue shedding industries. We'll continue developing new ones.

But no one can honestly guarantee the same people harmed in the first process will be rescued by the second. And the political heat this generates will merely disguise the fact that this is a matter of political consensus.